Are You Ready for the Economy’s Next Move?
The latest inflation data has sparked discussions about the Federal Reserve’s progress towards its 2% target. With the recent interest rate cut still fresh in our minds, the inflation numbers for September are indicating that the central bank may be close to achieving its objective.
According to economists at Goldman Sachs, the Commerce Department’s personal consumption expenditures price index for September is expected to show a 12-month inflation rate of 2.04%. If this projection holds true, it would bring inflation right in line with the Fed’s long-standing goal.
“The overall trend over 12-, 18 months is clearly that inflation has come down a lot, and the job market has cooled to a level which is around where we think full employment is,” Chicago Fed President Austan Goolsbee stated in a recent CNBC interview.
While the inflation numbers are showing signs of improvement, there are still obstacles that policymakers need to address. The core inflation rate, which excludes food and energy prices, remains a concern for the Fed. However, Fed Chair Jerome Powell remains optimistic about the future, expecting housing inflation to recede and broader economic conditions to support disinflation.
Lower inflation rates could pave the way for further rate cuts by the Fed, especially as they shift their focus to the labor market. However, there is some hesitation about the pace of future rate cuts, with some officials advocating for a more cautious approach.
As we look ahead, the economic landscape remains uncertain. With futures traders predicting rate cuts at both the November and December meetings, it’s essential for investors to stay informed and prepared for any potential changes in the market.
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